China cuts rates again as growth engine stalls China's central bank cut interest rates on Friday for the sixth time in less than a year, and it again lowered the amount of cash that banks must hold as reserves in a bid to jump start growth in its stuttering economy.
Oil down as dollar offsets China move; glut hits prompt U.S. crude
Oil fell on Friday, erasing early gains as traders dismissed a rate cut by China to focus on a surging dollar and weaker spot prices for U.S. crude as a glut weighed on prompt supplies.
A rally in U.S. stocks, however, bolstered risk appetite across financial markets, limiting the downside in oil.
Brent crude oil was down 28 cents at $47.80 a barrel by 11:10 a.m. EDT, after falling as much as 63 cents earlier.
U.S. West Texas Intermediate (WTI) crude was down 75 cents, or 1.6 percent, at $44.68, after hitting a three-week low at $44.20.
Both Brent and WTI have lost about 5 percent on the week, sliding for a second straight week.
heavyweights Alphabet (GOOGL 734.95, +53.81), Amazon (AMZN 601.57, +37.66), and Microsoft (MSFT 52.92, +4.89) beat their respective results last evening, which sparked a rally in equity futures. Futures held those gains through the night, extending their advance this morning after the People's Bank of China lowered its one-year lending rate by 25 basis points to 4.35% and cut its reserve requirement ratio by 50 basis points for qualifying institutions.
The news from China ensured a sharply higher start, but the market has not been able to build on the opening surge. Instead, stocks have drifted back from their highs with the S&P 500 surrendering about a third of its opening advance. Still, the benchmark index remains on track to end the week higher by 1.8%. Biotechnology has contributed to the strength in health care, evidenced by a 2.2% spike in iShares Nasdaq Biotechnology ETF (IBB 312.61, +6.50). The Dollar Index continues to rally higher as China surprised markets by cutting lending rates and the level of reserves banks must hold. While long rumored the timing caught markets off-guard and comes on the heels of a dovish press conference held by the ECB on Thursday.
UAW, Ford reach tentative contract deal, ratification vote next
Ford Motor Co and the United Auto Workers on Friday reached a tentative agreement for a new four-year labor contract, the union and company said.
General Motors Co workers are in the final stages of voting on their new four-year contract, which is expected to be approved after large plant results have been announced in favor of the deal.
The new deal at Ford is structurally similar to the GM pact and a Fiat Chrysler-UAW contract ratified two weeks ago, which both call for an end to the two-tiered wage system that paid newer workers much less than veteran UAW auto workers.
UAW President Dennis Williams has called the GM and Fiat Chrysler contracts "very rich agreements." On Friday in a statement, Williams said the proposed Ford contract "will solidify job security," but did not get specific about any production commitments by the company.
Those deals call for an eight-year progression from the time of hiring to reach top pay of about $30 per hour.
Billions wiped off travel shares after Paris attacks, overall market steady
European shares held steady on Monday, supported by gains in the energy sector that helped offset a slump in travel stocks following Friday's militant attacks in Paris.
Energy shares outpaced the broader market, buoyed by the prospect of higher oil prices following stepped-up French air strikes on Islamic State targets in Syria.
French shares slightly underperformed when markets reopened for the first time since the coordinated suicide bombings and shootings by Islamist militants that killed 129 people.
Around 2.3 billion euros ($2.46 billion) were wiped off the STOXX 60 Travel & Leisure index amid fears that the sector could be harmed by a loss of consumer confidence.
Shares in French hotel group Accor fell 4.7 percent, Air France fell 5.7 percent while shares in Eurotunnel and Aeroports de Paris, the operator of Paris' Charles de Gaulle and Orly airports, were down over 3.8 percent.
Luxury stocks were also under pressure. Hermes, LVMH and Kering, which get a large part of their sales from foreign tourists in Paris, were down 0.7-1.4 percent.
"Paris is one of the most important cities worldwide in terms of luxury spending and the timing (of the attacks) is not good too -- a few weeks before Christmas, the most important period for retailers," said Gregoire Laverne, fund manager at Roche Brune Asset Management.
SunEdison Inc. (NYSE: SUNE) was downgraded to Perform from Outperform at Oppenheimer. The stock closed down 12% at $1.98 on Monday and was indicated down 20% at $1.56 after the company delayed its annual report due to an internal probe.
Energy pioneer McClendon dies in fiery car crash, a day after indictment Former Chesapeake Energy Chief Executive Aubrey McClendon, a brash risk-taker who helped transform the U.S. energy industry with shale gas, died when his car slammed into an overpass on Wednesday, one day after being charged with breaking federal antitrust laws, police said. He was 56.
McClendon was alone in his 2013 Chevy Tahoe when it sped into an embankment along a remote two-lane road in Oklahoma City, where it burst into flames, a police spokesman said. The cause of death will be determined later by a medical examiner, the spokesman said.
The crash occurred less than 24 hours after the U.S. Department of Justice announced that McClendon had been indicted for allegedly colluding to rig bids for oil and gas acreage while he was at Chesapeake. He had denied the charges.
Over more than two decades, he built Chesapeake from a small wildcatter into one of the world's biggest natural gas producers before resigning in 2013, after a corporate governance crisis and investor concerns over his heavy spending
Tuesday's indictment followed a nearly four-year federal antitrust probe that began after a 2012 Reuters investigation found that Chesapeake had discussed with a rival how to suppress land lease prices in Michigan during a shale-drilling boom. Although the Michigan case was subsequently closed, investigators uncovered evidence of alleged bid-rigging in Oklahoma. (http://reut.rs/1TPxUVy)
REVERED FOR HELPING OKLAHOMA
A native of Oklahoma, McClendon attended Duke University before starting Chesapeake in 1989 with his friend Tom Ward. Ward, who later broke away to launch his own company, SandRidge Energy Inc (SDOC.PK), called McClendon's death "not only a heartbreaking day for me but a sad day for all of Oklahoma."
McClendon was known for his high tolerance for risk and debt and for his lavish lifestyle, which included the purchase of high-end homes, antique boats and an extensive wine cellar.
Lumber Liquidators, SolarCity, and Intercept Pharmaceuticals Jumped Today
U.S. investors have largely been sheltered from the global slowdown, but with earnings season set to start officially next week, companies could continue to see the impact of sluggish economic conditions in key parts of the globe. That could weigh on results, and investors reacted to that prospect negatively. Still, some stocks managed to climb despite the negative sentiment, and Lumber Liquidators (NYSE:LL), SolarCity (NASDAQ:SCTY), and Intercept Pharmaceuticals (NASDAQ:ICPT) were among the better performers on the day.
Lumber Liquidators jumped 11% after the flooring specialist said it had won a California lawsuit. The suit, filed under the state's Proposition 65 covering cancer-causing chemicals, had alleged that the retailer hadn't made consumers aware of formaldehyde in some of its laminate flooring. A court dismissed the suit, and Lumber Liquidators said the favorable ruling marked an important step forward for the company. In the words of the flooring company's statement, "We look forward to continuing to deliver products that are compliant with California's environmental standards." The stock is still far below where it traded before the controversy over its flooring began, but Lumber Liquidators hopes the resolution of the lawsuit will put the episode behind it and allow the company to start making forward progress again.
SolarCity rose 7%. The solar-system provider had a minor news item about a two-megawatt solar array in a remote portion of West Texas, but the more likely cause of the bump had to do with the negative comments that solar peer First Solar made in its analyst-day presentation. First Solar said it wouldn't make projections about its expected financial results for 2017, saying instead that it didn't have enough certainty about its future direction to provide solid guidance. Investors in First Solar took that as bad news, but SolarCity seemed to take bad news for its competitor as good news for its own prospects. The residential solar specialist still faces plenty of uphill battles against regulators and others in the industry, but many think SolarCity can still keep taking advantage of favorable tax incentives to entice homeowners to install residential systems and keep the money flowing.
Finally, Intercept Pharmaceuticals climbed 13% in the wake of favorable comments from an FDA staff review for its obeticholic acid for treating a liver disease known as primary biliary cirrhosis. The reviewers supported the use of obeticholic acid under certain circumstances, although it stopped short of making a general assessment of the drug's safety record, especially in patients that suffered from the disease more seriously. The next step for Intercept will be a formal advisory panel meeting later this week, and if that goes well, the road to final FDA approval will be much clearer for the drug and for Intercept's long-term prospects.
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